Level 3's Stock Surges After CenturyLink Buyout Deal Confirmed

Shares of Level 3 Communications Inc. surged 3.9% in premarket trade Monday, after the communications services company confirmed a deal to be acquired by CenturyLink Inc. . The deal, which values Level 3 at about $23.9 billion, as a total value of about $34 billion when including debt. Under terms of the deal, CenturyLink will pay $26.50 a share in cash, and 1.4286 of its shares for each Level 3 share outstanding. Based on CenturyLink shares reference price of $28, that values Level 3's stock at $66.50, or a 23% premium to Monday's closing price. Level 3's stock had run up 15% over the past two sessions after The Wall Street Journal reported that the companies were in advanced merger talks. CenturyLink expects the deal to add to free cash flow in the first year after closing, and to generate $975 million in annual synergies. Level 3's stock has slipped 0.6% year to date through Friday, while CenturyLink's has climbed 21% and the S&P 500 has gained 4%.